Hidden Building Costs

Avoid cost overruns! Watch out for surprise expenses when you build your home

Male customer at Home Depot looking inside a microwave oven
Home Depot Shopping. Photo by Spencer Platt/Getty Images News Collection/Getty Images

It's important to dream, but before you get far into the planning process, be sure you know how much you can safely spend on your new home. Don't depend on the advice of friends or family. And don't count on total transparency from anyone who is selling something—including your banker, who may sell you a mortgage you cannot afford. Talk to your accountant or financial adviser. Most of all, trust in yourself and your own good judgment.

As you plan your construction budget, don't forget the hidden expenses. You're likely to run into a bundle of costs that aren't included in the building contract. These may include:

  • Phone, cable, and Internet connections
  • Refrigerator, stove, and laundry appliances
  • Furniture (Chances are you'll want many new items for your new home)
  • Curtains, blinds, shades, and window treatments
  • Carpets, installed or not
  • Flowers, shrubs, trees, and grass

Also, consider that your new home may come with higher living costs. Be sure your budget includes:

  • Utility costs
  • Yard care
  • Maintenance
  • Taxes
  • Home insurance (consider replacement costs)

Don't forget the land!

If you have not yet purchased a building lot for your new home, talk with Realtors to get a rough estimate of land costs. Although there may be exceptions to this rule, in general, expect that 20 to 25 percent of your new home project will go toward the land.

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